The Federal Deposit Insurance Corp.'s legal opinion that thrift deposits acquired by banks cannot be used to pay off Financing Corp. bonds warrants another look. The Savings Association Insurance Fund is responsible for paying $780 million each year in interest on the so-called Fico bonds. The FDIC's decision to block some SAIF revenue from the bond payments makes a default more likely. The bank-owned thrift deposits are called Oakar and Sasser deposits after the two lawmakers who sponsored amendments making the acquisitions possible. What follows is the FDIC's official position, issued earlier in the year.

The FDIC legal division has received inquiries concerning the opinion it expressed in a letter sent to the General Accounting Office on April 23, 1992.

This general counsel opinion confirms the opinion expressed by the FDIC in 1992 and sets out in greater detail the reasoning underlying that opinion. In addition, this opinion sets forth the agency's position that assessments paid to the Savings Association Insurance Fund by any former savings association that has converted to a bank charter but remains a SAIF member are not available to the Financing Corp.

In the 1992 letter, the FDIC advised the GAO that assessments paid on deposits acquired by banks from SAIF members should remain in the SAIF, retroactive to the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and were not required to be allocated among the Fico, the Resolution Funding Corp., or the FSLIC Resolution Fund.

The GAO described this conclusion as "reasonable" in a letter dated May 11, 1992. The relevant financial statements were restated and prepared in reliance on the FDIC's opinion, and the GAO subsequently cited the agency's conclusion in its audits of the 1990, 1991, and 1992 financial statements of SAIF and FRF.

The principal reason stated in the 1992 letter for this conclusion was that Oakar banks are members of the Bank Insurance Fund, not SAIF; thus, assessments paid by such BIF members are not subject to Fico, Refcorp, or FRF draws because the applicable statutory provision require contributions only from SAIF members.

An additional basis for the FDIC's conclusion, though not expressly stated, was that Fico's assessment authority extends only to savings associations that are SAIF members and therefore does not extend to Oakar banks, since Oakar banks are not savings associations.

The express statutory language of Fico's enabling legislation grants assessment authority to Fico only over insured depository institutions that are both savings associations and SAIF members.

Even if Oakar banks could be regarded as members of both BIF and SAIF rather than just BIF, they are not savings associations.

Where, as here, the relevant statutory language is clear and unambiguous, well-established principles of statutory construction dictate that the plain meaning of the statute must be given effect. The FDIC concludes that the opinion expressed in the 1992 letter - that SAIF assessments paid by Oakar banks should remain in the SAIF and are not subject to Fico, Refcorp, or FRF draws - remains correct.

Further, the FDIC concludes that SAIF assessments paid by any former savings association that has converted from a savings association charter to a bank charter, and remains a SAIF member, are likewise not subject to draws by Fico.

The FDI Act expressly provides that any such institution is a bank. Since Fico's assessment authority extends only to savings associations that are SAIF members, and since Sasser banks are not savings associations, SAIF assessments paid by Sasser banks are not subject to draws by Fico.

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